The Adani Group, despite its popularity, is in debt. And this debt has only doubled over the last five years.
Back in 2017, the Adani group was in debt of ₹1 lakh crore. Fast forward to 2022, the enterprise has a debt of ₹2.2 lakh crores. This is because of their expansion in industries like energy, cement, and airports.
To make this possible, Adani needs your money.
But this isn’t it AT ALL. The Adani group isn’t planning to stop here.
You see when you want to dive into fields that require a significant amount of money, you expect debts – heavy debts!
And that’s what the Adani Group is also expecting. The group is planning to spend a whopping $150 billion on its businesses over the next decade. An amount of $150 billion is enough to run a country right now. Yet the group wants to diversify and build itself so strong that it doesn’t mind taking such a substantial risk.
Now talking about Adani, he’s a pretty successful businessman. He understands that perhaps building the entire thing on debts isn’t exactly substantial.
That’s why he needs money that he doesn’t have to return.
Adani right now is planning to raise equity capital, which explains in this newsletter.
For this part of the newsletter, we will get a little technical, so bear with us!
Back in April, Adani Enterprises raised over ₹7500 crores in equity from one of the largest companies in the UAE. In the same way, money is being raised from countries like Canada too. But Adani right now doesn’t just want the institutional money.
He wants money from everybody!
This is why last week, Adani announced its plans to raise up to ₹20,000 crores in equity capital, out of which most of the money will come from people like you and us.
The Adani structure
Let’s talk about the Adani structure for a second. The major entities like Adani airports, Adani Mining, Adani Solar, Adani water, and others come under the same umbrella – The Adani Group.
The money that’s raised from us will fuel all these entities under the umbrella of Adani Group.
“So how would this money be raised?”
Through a Follow-on Public Offer (an FPO).
For those who don’t know what an FPO is, consider it a regular IPO but for the companies that are already listed. These companies just issue new shares that the institutions or the people can buy.
Most importantly, investors will also be offered shares at a 20% discount. If the Adani family owns 80 of the 100 stocks, after the FPO, they will own 80 of the 110 stocks. That’s how it works.
But despite its promising future, the goal is to just reduce the dependence of the Adani Group on debt and raise money from people.